“An expert is a person who has made all the mistakes that can be made in a very narrow field.” —Niels Bohr, Danish physicist and Nobel Prize winner.
As industry experts know, real estate is both a science and an art. The attrition rate for commercial brokers entering the business is more than 70%. Of the remaining 30%, only 10% are considered successful by industry standards. Real estate brokerage has long been considered a commodity by consumers and even governing boards. Historically, the populist take is that real estate has a fixed value, and a broker simply facilitates the transaction.
This couldn’t be further from the truth—especially in commercial real estate. As illustrated in our scenario, there are multiple points of negotiation in any transaction. Many of them don’t even come up amid negotiations unless a broker is a true expert in a particular type of transaction.
It certainly requires tried-and-true knowledge, strategy and expertise to be successful. A broker needs to be an expert in real estate types and values, local market conditions, specific industries, negotiating, and in collaborating with other industry experts. True real estate expertise means having an understanding of multiple factors and then utilizing that knowledge strategically in favor of the client. It’s easy enough to find a broker who will merely facilitate a transaction for you with a “suitable” result. But search out that 10% broker. He or she is the individual that will bring you the expertise to get a fiduciary result—not just a satisfactory result.
I offer the following guidelines to help you choose the right firm and broker to represent your interests:
Find a Tenant/Buyer representation firm and/or require a strict buyer agency agreement. A number of reputable firms are available locally and nationally. If a broker represents even one property, it is a conflict of interest.
Find a company that has, at a minimum, training and best practices in place in the following areas:
Commercial real estate expertise: This should include standards for the most favorable time to negotiate a lease. If you are too close to the end of your lease, the Landlord has the advantage. If you are too far from the end of your lease, you could end up carrying double rents or out-of-market rents (or TI’s).
Negotiation strategies and training for all brokers: Does the company hire people that can withstand intense negotiations? A broker needs to be able to put the needs of the client above his own need for approval.
In-depth market knowledge: Does the brokerage have in-house training so that brokers understand complementary and competing uses in the dental industry? Do the brokers understand the inherent hazards of overbuilding an area? Does the brokerage have tools and research to support their brokers in determining the best locations?
In-depth medical real estate knowledge: Does the broker or firm provide medical- and dental-specific real estate training? Often the strength of a medical tenant can add up to several thousands of dollars in a negotiation.
Christian is the Founder and CEO of GILE Healthcare Real Estate (Formerly Arizona Healthcare Realty) a tenant and buyer representation firm specializing in medical real estate and investment services. A graduate of the United States Air Force Academy, Christian served on active duty in the U.S. Air Force for 10 years in Texas, California and Colorado and an additional 3 years in the reserves. He began his career in Commercial Real Estate in 2004. In that time he has personally negotiated over 1500 medical, dental, and veterinary lease & sale transactions for his clients. His representation and advice continue to result in extraordinary increases in profitability and savings for his clients. He now resides with his family in Scottsdale, Arizona.